Obama Would Pay More — Romney, A Lot More — If Bush-Era Tax Cuts End

An occasional series, Fiscal Cliff Notes
breaks down the looming "fiscal cliff" of expiring tax cuts and deep automatic spending cuts set to hit around the first of year.

About 80 percent of Americans would see their taxes go up if all the tax cuts signed into law by President George W. Bush were to expire as scheduled at the end of this year. And nearly 100 percent of the highest income earners would have to pay more — including both the Obamas and the Romneys. "I should pay more taxes, and folks in my income bracket should pay more taxes," President Obama said at a January campaign event. In 2011, Obama and the first lady had about $500,000 in taxable income, after deductions. If the tax cuts expire, the Obamas will pay an estimated $15,000 to $20,000 more in federal taxes, says Bill Smith, managing director in the CBIZ MHM national tax office. "Most of the Obamas' income was from wages or from book royalties," explains Smith, whose large accounting and tax firm works with high net-worth individuals. If the cuts expire, tax rates on income at just about every level would rise. Smith says the top marginal tax rate would go up from 35 percent to 39.6 percent.

"And so you can see just the rate differential, the rate increase at the upper end accounts for a fairly high tax increase for the Obamas," he says. But it's nothing compared to the tax increase the Romneys would face. "Now you're talking about real money," says Smith. Not only do Mitt and Ann Romney have a lot more income than the Obamas — about $20 million in 2011, according to their estimated tax returns — but more than half of it comes in the form of dividends and capital gains, taxed at a lower rate. In January, Romney said: "What's the effective rate I've been paying? It's probably closer to the 15 percent rate than anything. Because my last 10 years ... my income comes overwhelmingly from investments made in the past, rather than ordinary income." Smith says much of that advantage would go away if the Bush-era tax cuts expire. "Qualified dividends go from a 15 percent rate all the way to 39.6 percent," he says. And long-term capital gains rates would rise by 5 percentage points. In all, based on their 2011 income, the Romneys would see an increase of more than $1 million in federal taxes in 2013, Smith says.

Blind Archer Makes World Record

As we've reported, there were no public events on the Olympic sporting schedule today, the day of the opening ceremony. But we must note that two world records were set at the London 2012 Games this morning. That's when South Korean archer Im Dong-hyun scored a record 699 points. You might recall Im's name — he's made headlines because he is both a gold medalist and legally blind. Im, 26, was a teenager when he started to lose his eyesight. His vision is now rated at a reported 20/100 in his right eye, and 20/200 in his left eye. Im described how he copes with his condition in an interview with The Telegraph:

"In his words, it leaves the rainbow colours of the archery target looking 'as if different types of paint have been dropped in water. The lines are blurred.' "Im began losing his eyesight as a teenager, when he was already an established archer, although there are no tell-tale signs. "'I do not feel that I need to wear glasses. I am not myopic, I am far-sighted,' he said, after one of his daily training sessions at his training centre in Seoul." Olympic archers shoot at their target from a distance of nearly 230 feet — or, 70 meters, to be exact. The target has two center rings, which are 4.8 and 2.4 inches in diameter. In the interview, Im went on to describe how he "feels" each shot with his body. He has developed muscles that are very sensitive to the kind of consistency he needs to hit his target, he says. On the strength of Im's result Friday, the South Koreans also set a team world record in Friday's event, a preliminary ranking round. American Brady Ellison, the world's No. 1-ranked archer, placed tenth Friday, with 676 points.

London Opens Up, In Danny Boyle's 'Warm-Up Act' For The Summer Olympics

Every recent opening ceremony of the Olympics went for glitter and glamour, in an escalating war of excess. Ceremony fanatics consider the Beijing opening ceremony the gaudiest of all — and Oscar-winner Danny Boyle (the director of Slumdog Millionaire) had $42 million to try to outdo the Chinese organizers. Instead, Boyle says, "You can't get bigger than Beijing. So that, in a way, kind of liberated us. We thought, 'Great. Oh good. We'll try and do something different, then.' " The result is a "show," as Boyle calls it, focused on Britain's pastoral past and the "pandemonium" of the Industrial Revolution. It also celebrates British culture, music, literature — and even socialized medicine. The government-supported National Health Service "is embedded in our culture," Boyle says, and it's also embedded in the ceremony.

"We hope the feeling of the show is a celebration of generosity ... and of hope," he told reporters before Friday's ceremony began. "There's no better expression of that," he continued, than the 15,000 volunteers performing in the ceremony, and their belief "in this ideal that we can all come together in peace and celebrate the greatest of us." In the U.S., the opening ceremony is being broadcast by NBC on tape-delay Friday, airing at 7:30 p.m. in most markets and at 6:30 p.m. in the Central time zone. In London, the show begins at 9 p.m. — or 4 p.m. EDT. Forgive Boyle for waxing rhapsodic about this "warm-up act for the games." Sitting beside him at an embargoed news briefing was Sebastian Coe, the former Olympic gold and silver medalist who chairs the London Organizing Committee. "This is probably the biggest day of my life," Coe declared. "This has been 10 years in the making." About half of the opening ceremony is lightly produced, as thousands of athletes march into London's Olympic Stadium behind colleagues bearing their nation's flags. "We don't get lost in show business," Boyle says. "The show will say a lot about us," Coe adds. "But I also want it to be a dedication and a welcome — a British welcome — to the athletes of the world."